Bill C-32

Fall Economic Statement Implementation Act, 2022

An Act to implement certain provisions of the fall economic statement tabled in Parliament on November 3, 2022 and certain provisions of the budget tabled in Parliament on April 7, 2022

Part 1 implements certain measures in respect of the Income Tax Act by
(a) providing that any gain on the disposition of a Canadian housing unit within a one-year period of its acquisition is treated as business income;
(b) introducing a Tax-Free First Home Savings Account;
(c) phasing out flow-through shares for oil, gas and coal activities;
(d) introducing a new 30% Critical Mineral Exploration Tax Credit for specified mineral exploration expenses incurred in Canada and renounced to flow-through share investors;
(e) introducing the Canada Recovery Dividend under which banks and life insurers’ groups pay a temporary one-time 15% tax on taxable income above $1 billion over five years;
(f) increasing the corporate income tax rate of banks and life insurers’ groups by 1.5% on taxable income above $100 million;
(g) providing additional reporting requirements for trusts;
(h) providing rules applicable to mutual fund trusts listed on a designated stock exchange in Canada with respect to amounts that are allocated to redeeming unitholders;
(i) providing the Minister of National Revenue with the discretion to decline to issue a certificate under section 116 of the Income Tax Act in certain circumstances relating to the administration and enforcement of the Underused Housing Tax Act ;
(j) doubling the First-Time Homebuyers’ Tax Credit;
(k) expanding the eligibility criteria for the Medical Expense Tax Credit in respect of medical expenses incurred in Canada related to surrogate mothers and donors and fees paid in Canada to fertility clinics and donor banks;
(l) introducing the Multigenerational Home Renovation Tax Credit;
(m) allowing access to the small business tax rate on a phased-out basis up to taxable capital of $50 million;
(n) modifying the computation of income as a result of the adoption of a new international accounting standard for insurance contracts;
(o) introducing a new graduated disbursement quota rate for charities;
(p) providing that the general anti-avoidance rules can apply to transactions that affect tax attributes that have not yet been used to reduce taxes;
(q) strengthening the rules on avoidance of tax debts;
(r) modifying the calculation of the taxes applicable to registered investments that hold property that is not a qualified investment;
(s) modifying the tax treatment of certain interest coupon stripping arrangements that might otherwise be used to avoid tax on cross-border interest payments;
(t) clarifying the applicable rules with respect to audits by Canada Revenue Agency officials, including requiring taxpayers to give reasonable assistance and to answer all proper questions for tax purposes; and
(u) extending the capital cost allowance for clean energy and the tax rate reduction for zero-emission technology manufacturers to include air-source heat pumps.
It also makes related and consequential amendments to the Canada Deposit Insurance Corporation Act , the Excise Tax Act , the Air Travellers Security Charge Act , the Excise Act, 2001 , Part 1 of the Greenhouse Gas Pollution Pricing Act and the Income Tax Regulations .
Part 2 amends the Excise Act, 2001 and other related texts in order to implement changes to
(a) the federal excise duty frameworks for cannabis and other products by, among other things,
(i) permitting excise duty remittances for certain cannabis licensees to be made on a quarterly rather than a monthly basis, starting from the quarter that began on April 1, 2022, and
(ii) allowing the transfer of packaged, but unstamped, cannabis products between licensed cannabis producers; and
(b) the federal excise duty framework for vaping products in relation to the markings, customs storage and excise duty liability of these products.
Part 3 amends the Underused Housing Tax Act to make amendments of a technical or housekeeping nature. It also makes regulations under that Act in order to, among other things, implement an exemption for certain vacation properties.
Division 1 of Part 4 authorizes the Minister of Finance to acquire and hold on behalf of His Majesty in right of Canada non-voting shares of a wholly-owned subsidiary of the Canada Development Investment Corporation that is responsible for administering the Canada Growth Fund and to requisition the amounts for the acquisition of those shares out of the Consolidated Revenue Fund.
Division 2 of Part 4 amends the Bretton Woods and Related Agreements Act to increase the maximum financial assistance that may be provided in respect of foreign states.
Subdivision A of Division 3 of Part 4 enacts the Framework Agreement on First Nation Land Management Act .
Subdivision B of Division 3 of Part 4 contains transitional provisions in respect of the enactment of the Framework Agreement on First Nation Land Management Act and makes consequential amendments to other Acts. It also repeals the First Nations Land Management Act .
Division 4 of Part 4 amends the Government Employees Compensation Act in order to fulfil Canada’s obligations under the Memorandum of Understanding between the Government of Canada and the Government of the United States of America concerning Cooperation on the Civil Lunar Gateway.
Division 5 of Part 4 amends the Canada Student Loans Act to eliminate the accrual of interest on guaranteed student loans beginning on April 1, 2023.
It also amends the Canada Student Financial Assistance Act to eliminate the accrual of interest on student loans beginning on April 1, 2023.
Finally, it amends the Apprentice Loans Act to eliminate the accrual of interest on apprentice loans beginning on April 1, 2023 and to clarify when the repayment of apprentice loans begins during the interest suspension period from April 1, 2021 to March 31, 2023.

Fall Economic Statement Implementation Act, 2022

[Denis Trudel, Bloc, Longueuil—Saint-Hubert, QC]

Madam Speaker, I really enjoyed my colleague's speech on housing. It was very thoughtful, well-documented and well-written. He hit the nail on the head. The government's housing strategy includes a lot of numbers and promises, but it does not actually do much.

Let us talk solutions. The rapid housing initiative works fairly well because it fully funds projects. The program also makes it possible to build housing quickly.

Organizations tell us that all the other programs, such as the national housing co-investment fund and rental housing programs, which primarily offer loans, need to change. That money should go to not-for-profits so they can buy private property and get it off the market to ensure longevity. Does my colleague agree?

[Scott Aitchison, Conservative, Parry Sound—Muskoka, ON]

Madam Speaker, it is a really great idea. In fact, what we need to have here is a situation in which all levels of government are working together. Let us not kid ourselves. Municipalities and to a smaller degree provinces are the front lines of the housing crisis in this country. The federal government has a role to play in working with municipalities and provinces and, frankly, with the private sector. This country requires trillions of dollars of investment in the housing sector. We need the private sector on board. We need community groups on board. We need to be all working together to solve this crisis, not pandering to grandiose fixes but getting to work and working together to solve the problem.

[Alistair MacGregor, NDP, Cowichan—Malahat—Langford, BC]

Madam Speaker, I asked this question of one of my colleague's Conservative colleagues and did not get much of an answer, so I will pose it to him. There was interesting news coming out of the United Kingdom today, where the Conservative government of that country announced it was increasing the windfall tax rate on highly profitable oil and gas companies to 35%. It is doing that because it realizes the amount of money they are making is simply unfair to the British people.

Why is it that the U.K. Conservatives have the courage to do something like this but I do not hear anything from Canada's Conservatives, when we have the exact same problem affecting our two nations?

[Scott Aitchison, Conservative, Parry Sound—Muskoka, ON]

Madam Speaker, I am not going to get trapped in the ideological entrenchment of the NDP, but the fact of the matter is that the Liberal government collects billions and billions of tax dollars and promptly wastes it. Instead of collecting more taxes from companies and hard-working Canadians, I suggest we get rid of the government, put a Conservative government in place, and actually spend their money wisely.

[Dave Epp, Conservative, Chatham-Kent—Leamington, ON]

Madam Speaker, it is always a pleasure to rise in this chamber and bring the voices of the constituents of Chatham-Kent—Leamington to this place, and it is an honour to speak to Bill C-32, the fall economic statement implementation act.

The Conservative Party had two asks going into the fall economic statement process. One was to stop the tax increases and have no new taxes, which includes cancelling all of the planned tax hikes and the tripling of the carbon tax. The other was to stop the spending and have no new spending, and ensure that any new spending by ministers or ministries is offset by equivalent savings found elsewhere. We need to cut the wasteful spending and stop the inflationary deficits that drive up the cost of living. Of course, none of our demands were met in the fall economic statement, and for that reason, the Conservatives, me included, will not be supporting it. I know that is a shock to the members opposite.

The cost of government spending is the main driver of the increasing cost of living. As stated by a colleague in an earlier speech this week, Canadians now have to make tough decisions. Why? It is because the government did not make tough decisions.

Of course, the pandemic required extra spending. The Conservatives knew that and supported the early programs. However, $200 billion of it, almost half of the $500 billion of added debt, was not pandemic-related. Program spending by the government is now 30% above prepandemic levels. It is amazing.

Last week I was in my riding and hosted a series of coffee meetings over two days to hear from constituents. I was just talking about the rising cost of living, and that is exactly what I heard from my constituents. Over and over again, the rising costs of everything, particularly food, fuel and housing, were highlighted. Last month it was reported that there was 11.4% food inflation. This month the rising cost of food is reported as being 10.7%. That is what Canadians are facing when they make a trip to the grocery store.

While rising inflation is causing pain for Canadian families in their everyday lives, it has boosted the tax revenues of the government. One would think there would have been an opportunity in the fall economic statement to bring some fiscal responsibility to budgeting.

I am not an economist, but let me share some thoughts from some respected voices on the fall economic statement. I will begin with Douglas Porter and others from BMO Capital Markets, who stated:

Less than half of this year’s revenue windfall will make it through to an improved bottom line. Moreover, the double-whammy of slower (or no) growth and rising interest rates will limit flexibility into 2023.... [T]he boost to government finances from higher inflation is temporary. Eventually, costs do catch up to the run-up in prices, and revenues get crimped by the economic slowdown. Accordingly, after a nice run of better-than-expected fiscal outcomes, Ottawa’s finances are expected to turn more challenging next year.

Will the government look ahead and plan accordingly? Obviously from prepandemic times we know that it did not.

The House resumed from November 17 consideration of the motion that Bill C-32, An Act to implement certain provisions of the fall economic statement tabled in Parliament on November 3, 2022 and certain provisions of the budget tabled in Parliament on April 7, 2022, be read the second time and referred to a committee, and of the amendment.

[Dave Epp, Conservative, Chatham-Kent—Leamington, ON]

Madam Speaker, it is a pleasure this morning to continue to put some thoughts on the record regarding the fall economic statement implementation act.

Seven years ago, the current government inherited a balanced budget and a robust economy, but instead of maintaining balance or even paying down some debt, let us consider that for a moment, perhaps to prepare for the unknown, such as a pandemic or an unexpected war, it immediately began to add more spending, took the government finances back into a deficit and again started to add to the debt.

Then came the COVID–19 pandemic, which required additional spending. We supported those early programs. However, of the half a trillion dollars, yes, $500 billion, of added debt by the current government, $200 billion was not pandemic-related.

Program spending by the current government is now 30% above prepandemic levels. We now have structural deficits presently embedded in our finances, and of course the more that the government spends, the more things cost.

When the current government came to power seven years ago, it promised transparency. Do members remember “sunny ways”? This is what its own Parliamentary Budget Officer had to say on the transparency of the fall economic statement:

In this year’s FES, the Government identified $14.2 billion in new measures without providing specific details on this spending....

This lack of transparency presents challenges for parliamentarians and the public in scrutinizing the Government’s spending plans, particularly given the magnitude of measures, $14.2 billion—the largest amount announced without specific details since the 2016 [FES].

On top of all the other spending already outlined, the $20 billion, the current government is now asking the House for a $14.2 billion blank cheque. Are these sunny ways? Hardly. We will not be supporting this.

In my remaining time, I want to spend some time on one issue that is not addressed in the fall economic statement.

Last week, I had a series of eight meetings with my own constituents. The primary issue I heard from them was the rising cost of living, particularly the costs of food, fuel and housing. Those are the main things I heard, and in particular, food. Last month, as we are all now aware, there were 1.5 million visits to food banks, that in the country of Canada, a country that is considered a breadbasket.

The FES missed an opportunity to address an issue that has the potential to lower food costs, namely the status of the implementation of a grocery code of conduct.

First, we have heard much in statements in the media today about two seemingly contradictory statements, record grocery retailer profits and the counter-argument from industry that retailer margins have not changed in percentage terms through the pandemic. Both statements can be true, as retail volumes have increased during the pandemic as consumers have shopped more retail versus the food service that supplies the restaurant trade and institutional trade.

Second, the carbon tax, along with other issues, that is applied to the delivery of farm inputs and outputs, and to transportation all up and down the food chain, has increased costs for suppliers. Retailers maintaining their margins in percentage terms are applying this margin to a higher cost of goods from suppliers and to higher volumes generated by the change in market from consumers.

However, there is an opportunity for us to accomplish many goals if we get it right. What do I mean by getting it right? We can increase profits for food manufacturers and processors because of fair trading practices, and we can reduce the administration costs in attempting to comply with the many “rules” applied by retailers in an updated code of conduct. We can reduce administration costs for retailers in all these programs that are allegedly used as profit centres, but most importantly we can reduce consumer food costs.

Right now, shelf listing fees, fines for short or late deliveries and a host of other administrative exercises are adding costs that eventually the consumer pays. The U.K., Ireland and Australia have all gone down this road of a grocery code of conduct. Retailers were afraid that imposing a code would lead to a reduction in the number of retailers with gross sales meeting the threshold for application of the code. The U.K., since fixing its original voluntary attempts, has seen more retailers. It started with 10 and now has 14 retailers meeting the threshold dollar value, so the code has not driven consolidation there.

In conclusion, an appropriately structured code results in lower consumer prices and fairer trading practices within the value chain. In addition, it allows 10,000 independent grocers, who are so crucial for rural parts of our country, to be treated on par with the big five that control 85% of the grocery retailer trade.

The fall economic statement missed an opportunity to advance this issue for Canadians. Instead, the statement adds more government spending, which would only lead to higher inflation over time and the hurting of our most vulnerable citizens. With that I will conclude, and I look forward to questions.

[Wayne Long, Liberal, Saint John—Rothesay, NB]

Madam Speaker, only in an alternative reality would the Conservatives think that they are fiscal stewards. They ran nine straight deficits. They tried to balance the budget by throwing in the sale of stock and an EI rainy day fund in 2015. We all know, and Canadians know, that is not true.

In the fall economic statement, there are three things my constituents love: first, the doubling of the GST rebate for six months; second, the top-up for rent; and third, the waiving of interest on student loans. Which one of those programs will he actually tell his constituents he does not support?

[Dave Epp, Conservative, Chatham-Kent—Leamington, ON]

Madam Speaker, as the member knows, this side of the House did support the returning of tax to constituents.

However, when I opened my speech yesterday, I said that the fall economic statement presented an opportunity for the government to make hard decisions. It did not. Now consumers and Canadians have to make those hard decisions.

In the end, the more the government spends, the more things cost. It is as simple as that.

[Gabriel Ste-Marie, Bloc, Joliette, QC]

Madam Speaker, I thank and congratulate my colleague for his speech.

In the fall economic statement, the Minister of Finance reneges on a commitment she made in last spring's budget, which was to limit credit card fees for merchants. In the spring budget, she told us that she would introduce legislation and the issue would be dealt with this fall. However, now it has turned into a commitment to talk to the credit card companies, and if they do not self-regulate, she will introduce legislation later to force them to act.

In my hon. colleague's opinion, is that enough?

[Dave Epp, Conservative, Chatham-Kent—Leamington, ON]

Madam Speaker, the member points to a series of behaviours that occur in so many other issues.

There is talk. There are promises. There are announcements. So often there is not follow-through. I can think of another announcement in the spring budget, the funding for the Great Lakes Fishery Commission, which is seemingly not being honoured. There is a whole host of things that are talked about where there is not the follow-through by the government for real results for Canadians, particularly now given the cost-of-living increases that Canadians are seeing and the 1.5 million trips to the food bank. The government is not taking the opportunities it has to lower real costs for Canadians.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

Madam Speaker, one of the things that has really hit Canadians across this country is the high price of gas. It has gone up almost a dollar in my part of the country.

The Conservatives seem obsessed with stopping the increase in the carbon tax that comes into effect in April, which would amount to about two cents a litre. They are ignoring the fact that oil and gas companies have had immense windfall profits, billions of dollars, record profits this year because of the high price of world oil. The U.K. has instituted a 35% windfall tax on oil and gas companies. The CEO of Shell has asked the federal government here to tax them more.

I am wondering why the Conservatives are so silent on this way of really bringing help to Canadians.

[Dave Epp, Conservative, Chatham-Kent—Leamington, ON]

Madam Speaker, on the surface, that would seem like a plausible argument. What I did not hear was the books of our oil and gas companies being brought to the fore in the six years previous due to the policies of the Liberal government.

Record profits are not only being incurred in different parts of the country; that is how a market works.

Is there a role for the government to step in there? That is what the House is to decide.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

Other countries are doing it.

[Dave Epp, Conservative, Chatham-Kent—Leamington, ON]

Some are; some are not.